Financials

• Ping An Insurance (2318 HK / 601318 CH) is set to announce Annual 2024 Results on 19 March 2025.
• Option markets are currently pricing in a significantly larger post-announcement price move than historical patterns would suggest.
• Two trade examples for calendar spreads, taking advantage of elevated near-term implied volatility, are presented.

• Analyst and writer based in New York discusses the evolution of financial markets and reflects on personal experiences with Apollo
• Apollo is known for its hard work and talent in protecting their capital, with a focus on complexity and balance sheet analysis
• Apollo is a global alternative asset manager with around 750 billion in total AUM, divided into yield, hybrid, and equity strategies, making it one of the top players in the industry

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• The Nikkei 225 (NKY INDEX) has been in a paralyzed trend since August 2024. Then at the end of February 2025 it started to correct.
• As explained by Travis Lundy and Brian Freitas the index rebalance on March 5th, 2025 was a bit unexpected and minimal in terms of changes.
• The index bottomed 1 week after the March 2025 Nikkei 225 Average Review, and then started a rally, quite modest for now which could be signaling short-term tactical weakness.

• Revised eurodollar forecast up to 116, more bearish on the dollar
• Erosion of US exceptionalism due to tariff policy blowback
• Introduction of new conceptual framework called the dollar tariff smile to understand FX reaction to tariffs

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• Klarna is seeking to raise more than $1 billion in the IPO and targeting more than $15 billion in the listing.
• Klarna’s operating margin improved from -51.5% in 2022 to -14.2% in 2023, and -4.3% in 2024.
• Klarna generated revenue of US$2.8 billion (up 23.5% YoY) and operating loss of US$121 million in 2024 (versus operating loss of US$323 million in 2023).

• Kospi’s price action was concentrated in just two days, with the rest of the week marked by quiet trading.
• We examine Kospi’s performance relative to SPX within the broader global index landscape. .
• A word of caution on long volatility positions as current implied vol levels come into focus.

• Nifty traded in an exceptionally narrow range during a holiday-shortened week, a stark contrast to volatility in other markets.
• We highlight Nifty’s relative performance against SPX across both long- and short-term time frames.
• Implied volatility softened as the quiet range and muted trading activity put pressure on options pricing.

• A deal on the German fiscal package has been reached and is expected to be voted through in Parliament next week, leading to higher defense spending and revised growth forecast expectations.
• The massive sell-off in bund yields following the announcement can be attributed to higher ECB policy rate expectations, increased defense spending across the region, and term premium pricing.
• The revision of ECB terminal rate expectations and steepening of the money market forwards have put upward pressure on German yields, but the term premium may gradually fade, leading to a lower yield target of around 240-250 basis points by mid to late this year.

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• Block has demonstrated a noteworthy performance for the fourth quarter of 2024, highlighted by its significant growth in gross profit alongside strategic advances in both Square and Cash App functionalities.
• The company, formerly Square Inc., has expanded its capabilities by evolving Square from a mere payments tool into a comprehensive commerce platform and enriching Cash App’s financial services.
• The organizational restructuring is aimed at enhancing execution velocity, enabling the company to swiftly adapt and innovate within its roadmap.

• Global Indemnity Group, LLC, provides specialty and niche insurance products nationwide.
• GBLI focuses on small market property and casualty business.
• The company has made a concerted effort to reduce its property exposure.

• City Developments (CIT SP) aka CDL’s boardroom battle, framed as a family feud, grabbed media attention and overshadowed more serious, long-ignored corporate governance issues.
• Despite prolonged underperformance and founder-family control controversies, CDL’s board have failed to enact decisive reforms to restore shareholder value.
• The CDL saga exposes systemic risks in family-run, publicly listed firms where often corporate governance gets compromised and  minority shareholder interests are undermined.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, we had a look at a few of the upcoming listings in Hong Kong.
• On the placements front, Japan Post Bank (7182 JP) managed to do better than its last deal while Austal Ltd (ASB AU) didn’t do too well.

• On the 27th Feb 2025, online trading player SelfWealth Ltd (SWF AU entered into Scheme with Singaporean-based wealth manager Svava.
• Svava tabled a A$0.28/share Offer, in cash, by way of a Scheme, trumping Bell Financial (BFG AU)‘s A$0.25/share earlier bid. Svava also has a 18.83% stake.
• The Scheme Booklet is now out, with a Scheme Meeting on the 22nd April. Expected implementation on the 7th May. The IE (Grant Thorton) says fair & reasonable.

• We assess the effectiveness of short volatility versus long volatility positioning.
• Nikkei’s performance relative to SPX is analyzed across three distinct time frames.
• Volatility remained muted ahead of next week’s Bank of Japan meeting, while option volumes increased week over week.

• IVs remain subdued, trading sub-12% levels, as Option Markets expect low impact from U.S.-trade tensions. Risk premia compresses in spite of upcoming FOMC event risk. 
• Vol term-structure has moved further into Contango. Realized Vol continues to underperform.
• Vol-Surface is exhibiting interesting behaviour as Skew has compressed while Smile has extended. 

• We highlight HSCEI’s outperformance vs. SPX across both long- and short-term price histories.
• Mixed performance this week, with stimulus enthusiasm on Friday helping the market recover to a flat finish.
• Given recent outperformance, we outline a tactical hedge to manage risk.

• The Hartford Financial Services Group’s recent earnings highlighted both commendable achievements and areas of concern for the company.
• The reported outcomes for the fourth quarter and the full year 2024 underscore the company’s solid financial performance, propelled by strategic initiatives and a disciplined approach to underwriting and pricing.
• Positive aspects include robust growth across different sectors, with Commercial Lines witnessing a 6% growth in the fourth quarter and 9% for the year.

• Markel Group’s recent financial performance reflects a mix of both progress and challenges across its various business units.
• The company achieved operating income of $3.7 billion in 2024, up from $2.9 billion in 2023, primarily driven by strong returns in its public equity portfolio, which returned 20.1%.
• Despite this growth, a key takeaway from the earnings call is the need for improvement in the company’s insurance segment.

• Globe Life reported a fourth-quarter net income of $255 million, or $3.01 per share, compared to $275 million, or $2.88 per share, in the prior year.
• Net operating income increased 12% to $266 million, or $3.14 per share.
• Return on equity stood at 21.7%, while book value per share, excluding accumulated other comprehensive income, rose 13% to $86.40.

• Kinsale Capital Group’s fourth-quarter 2024 performance highlights reveal a blend of solid financial outcomes and certain market-related challenges.
• Operating earnings per share saw a notable increase of 19.4% compared to the same period in the previous year, reflecting robust profitability.
• Furthermore, gross written premium also experienced a healthy growth of 12.2%, demonstrating continued expansion within the company’s risk appetite despite heightened market competition.

• Nikkei Business reported Friday 14 March that Gunma Bank (8334 JP) and Daishi Hokuetsu Financial Group (7327 JP) (“DHFG”) were in talks to integrate to create a Super-Regional Bank
• Gunma and Daishi-Hokuetsu are part of the same multiple-regional bank alliances, including the Gunma-Daishi Hokuetsu Alliance since 2021, in order to collaborate regionally, build scale, and lower service provision cost.
• As Gunma and Daishi Hokuetsu serve adjacent jurisdictions, and they are already exploring sharing branches, this makes sense. The World with Interest (rates above zero) may cause more integration talk.

• Central Bank Focus: Nine Central banks decide on monetary policy next week. Among them the BoJ, the BoE, the SNB, and the Fed.
• Earnings Wave: major Hong Kong stocks reporting, including Tencent, Xiaomi, China Mobile, and Meituan.
• Triple Witching: Quarterly derivatives expiration hits multiple markets – Australia, Taiwan , and the US – alongside index rebalancing in both Australia and the US.

• W.R. Berkley Corporation concluded 2024 with record-breaking financial performance in both revenue and profit metrics.
• The key highlights from the earnings discussion reveal that the company achieved a remarkable return on equity of 23.6% for the year, with operating return on equity at 22.4%.
• The fourth quarter operating earnings increased by 15.5% to $453 million, translating to $1.13 per share, highlighting strong overall business performance.

• Primerica, Incorporated had a compelling fourth quarter in 2024, showcased by growth across key performance metrics.
• The company recorded an 11% increase in adjusted net operating income compared to the previous year, while adjusted operating income per share rose by 17%.
• For the entire year, these figures reflected a 14% and 20% increase, respectively.

• Waypoint REIT (WPR AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) next week. There are float changes and capping changes too.
• Estimated one-way turnover is 4.3% and will result in a round-trip trade of A$49m. There are 3 stocks with over 0.5x ADV to trade from passive trackers.
• We had Waypoint REIT (WPR AU) as a delete in December, but the stock was not deleted from the index. We had it as a close delete this time.

• Enact Holdings reported a robust financial performance for 2024, driven by strong credit fundamentals and strategic execution despite facing external challenges.
• The company achieved a record adjusted operating income of $718 million for the year, a 9% increase from the previous year, translating to $4.56 per diluted share.
• Their adjusted return on equity stood at 15%, while the adjusted book value per share increased by 12% to $34.16.

The Law Debenture Corporation (LWDB) has a long-term record of outperformance versus its broad UK equity market benchmark and peers, while delivering above-average DPS growth. This continued in FY24, with the trust’s unique combination of a UK investment trust and a cash-generative professional services operating business (IPS) continuing to generate strong results. The 2024 share price total return of 15.9% was 6.4pp ahead of the benchmark, professional services underlying PBIT grew 6.4% and DPS increased by 4.7%.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: New World Development
• In the US, the February final demand PPI came in lower than expected at 0.0% m-o-m (0.3% e / 0.6% revised p) and 3.2% y-o-y (3.3% e / 3.7% revised p). PPI excluding food and energy fell 0.1% m-o-m, but was up 3.4% y-o-y (3.5% e / 3.8% revised p).
• The PPI was weighed down by a 1% decline in trade services. That said, categories that go into the PCE price index (the Fed’s preferred measure of inflation) were largely firmer, which could contribute to a high PCE print (vs. the CPI) later this month.

• American Financial Group (AFG) concluded a successful 2024 with substantial financial performance, despite some industry-related challenges.
• The company’s core net operating earnings per share were $10.75 for the year, translating to an impressive core operating return on equity (ROE) of 19.3%.
• These results stem from a diversified specialty insurance portfolio, effective capital management, and strategic investments, which helped AFG outperform many of its peers.

• Prudential Financial Inc. (PRU) recently held its quarterly earnings conference call, where they outlined their performance and strategic direction for 2024.
• The results indicated both progress and challenges as the company strives to transform into a more capital-efficient and growth-oriented enterprise.
• During the call, management announced leadership changes with Andy Sullivan stepping in as the new CEO and Caroline Feeney taking on an expanded role.

• Radian Group’s financial performance for the fourth quarter and full year 2024 illustrates a balanced execution of strategies aimed at maintaining operational efficiency and supporting shareholder value.
• The company reported net income of $604 million for the year, achieving a return on equity of 13.4%.
• This reflects robust operational outcomes supported by a high-quality mortgage insurance portfolio and effective capital management.

OUTsurance released H125 results on 14 March 2025, delivering 52% normalised EPS growth and return on equity (RoE) of 30.8%. South Africa (SA) property & casualty (P&C) delivered 32% earnings and 9% premium growth, while Youi (Australia) recorded 154% earnings and 22% premium growth. SA Life delivered 225% profit growth, while its Irish start-up made losses of ZAR246m (up 289%). Net asset value (NAV) per share was 870ZAc (large dividend payments over the period). It declared an interim dividend of 88.6c/share (up 44.8%). OUTsurance trades at a price to NAV of 7.5x, which is the highest level seen since its unbundling and superior to its peers.

• AIA Group (1299 HK) is set to announce its 2024 Annual Results on 14 March 2025, 09:00 am HK Time.
• AIA Group (1299 HK) has historically experienced volatile trading during results days, with a median move of +/- 4.2%, considerably higher than typical daily movements. 
• AIA Group Ltd (1299 HK) will announce its final dividend. With a history of increases, a divided raise can be expected.

• Seoul Guarantee Insurance (031210 KS) raised around US$125m in its Korean IPO. 
• Seoul Guarantee Insurance (SGI) is a guarantee insurance firm operating predominantly in Korea.
• We have looked at the firm’s past performance and discussed our thoughts on valuation. In this note, we talk about the trading dynamics.

• Mitsui AM invests $120M in acquiring 50% stake in Greater Tokyo Data Centre, expanding their presence in the region.
• Star Entertainment secures $590M refinancing from Salter Brothers in Australia, providing capital for future growth and development.
• Panel discussion highlights how Australia’s evolving society is shifting focus of Build-to-Rent sector from macro to micro level.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Seazen Group, Adani Ports, Cikarang Listrindo, Vedanta Resources
• In the US, the February CPI came in below estimates at 0.2% m-o-m (0.3% e / 0.5% p) and 2.8% y-o-y (2.9% e / 3.0% p). Core CPI (excluding food and energy) eased to 0.2% m-o-m (0.3% e / 0.4% p) and 3.1% y-o-y (3.2% e / 3.3% p).
• US Treasuries ended the day lower, as an initial rally following the lower-than-expected CPI inflation numbers was quickly reversed amid concerns over the escalating trade war and its impact on future inflation.

Invesco Asia Trust (IAT) delivered a 12.4% NAV total return (TR) over the 12 months to end-December 2024, bolstered by the stock market rally in China and Hong Kong (to which IAT’s managers patiently maintained an overweight exposure) on the back of stimulus measures announced by the authorities in September 2024. While IAT’s return is somewhat behind the 14.0% posted by its benchmark, IAT’s share price total return of 15.8% was ahead of it, and the trust maintains a strong mid- and long-term track record of outperforming the market and its peer average. IAT remains positioned to benefit from the consumption growth story of the region via a combination of internet companies, consumer-related businesses (including e-commerce) and financials stocks, among others. The managers also see opportunities across tech and manufacturing, even if they are now cautiously underweight Taiwan on valuation grounds. Finally, their below-benchmark position in Indian equities (which also command high valuations relative to the broader region) is coupled with an overweight exposure to Indonesia, where the managers see an attractive combination of growth prospects and undemanding valuations.

Istesso, IP Group’s largest private life sciences holding (c 11% of end-June 2024 portfolio value), has announced the results of its Phase IIb clinical trial of leramistat in rheumatoid arthritis (RA). Leramistat demonstrated a statistically significant reduction in bone erosion, the key secondary endpoint, as well as improvements in disability and fatigue. As a result, Istesso plans to evaluate the drug’s potential to promote adaptive tissue repair in RA in combination with existing disease-modifying anti-rheumatic drugs (DMARDs), as well as for other chronic diseases. It highlighted that it is sufficiently funded to conduct these studies. That said, the study failed to meet its primary endpoint of improvements in ACR20 response versus placebo. IP Group will provide an update on Istesso and its (possibly reduced) valuation upon releasing its FY24 results in March.

Custodian Property Income REIT (CREI) reported a 2.5% NAV total return for Q325, driven by income but with NAV also increasing. Portfolio values increased for the second consecutive quarter and, with a robust occupier market driving rent growth, the company is increasingly confident that the market is at or near an inflection point. CREI yields 7.8% and its portfolio has significant opportunities to further increase income and fully covered DPS. The prospects for capital growth also appear increasingly positive.

• MetLife reported strong fourth quarter and full-year 2024 results, with adjusted earnings marking an increase and signaling resilience amid varied economic conditions, including fluctuating interest rates and inflation concerns.
• This performance came amidst the conclusion of their five-year strategy, Next Horizon, from which the company exceeded all financial commitments and launched its New Frontier strategy, targeting improved growth dynamics.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Foxtons Group’s FY24 results showed revenue and adjusted operating profit growth of c 11% and c 38%, respectively, reflecting the developing success of the company’s strategic vision. This suggests that its medium-term targets, particularly the revised adjusted operating profit target of £28m–33m, are coming increasingly into focus. We believe market share is being gained across all divisions. We maintain our estimates and our 134p per share valuation, though risks appear to be skewed to the upside if market momentum continues, which could be supported by a further easing of interest rates.

Lancashire Holdings released its FY24 results on 6 March and declared another 25c/share special dividend on top of the 75c/share declared in November 2024. This brings combined special dividend declarations since FY23 to 200c/share, which equates to 36% of NAV per share at the start of FY23. Lancashire introduced a more liberal dividend policy in FY24, which resulted in a full ordinary dividend declared for FY24 of 22.5c/share compared with 15c/share for FY23 (combined dividend yield of 15.3%). Year-end NAV/share was 612c compared with 617c in FY23 and a return on equity (RoE) of 23.4% compared with 24.7% in FY23. A pull-back in the share price on the back of the results and FY25 RoE guidance in the mid-teens gives a price to NAV of 1.22x, well below the 1.3–1.6x range before interest rates increased in 2022.

• ESR Group (1821 HK)’s preconditional scheme offer from the consortium is either cash (HK$13.00), scrip or a combination of cash/scrip. The offer is final.
• On 7 March, the consortium disclosed two additional irrevocable (3.47% of outstanding shares) and satisfied two regulatory preconditions (UK FCA and Singapore MAS).
• Since announcing the offer, peers have materially derated, lowering the vote risk. At the last close and for an end August payment, the gross/annualised spread is 4.5%/10.1%

• Softbank Group (9984 JP) has lost nearly 18% of its stock value since February 7th. The stock has been falling for 4 weeks, our model indicates a very oversold condition.
• SoftBank’s has a number of strategic investments and initiatives that make it an attractive investment.
• Below, we outline key fundamental factors that align with our quantitative model’s view, suggesting the stock is oversold and could be a compelling buy at its current price.

• Knowledge Realty Trust (258259D IN)  looks to raise about US$712m through its upcoming India IPO. The lead bookrunners for the deal are Kotak, Axis, BoFA, ICICI, IIFL, JMFin, MS, SBI.
• Knowledge Realty Trust (KRT) owns and manages a high-quality office portfolio in India. KRT covered 87% of India’s office supply and gross absorption between FY16-9M24, as per CBRE report.
• The portfolio includes 6 city-center offices and 24 business parks/centers.  These assets are spread across 6 cities — Hyderabad, Mumbai, Bengaluru, Chennai, Gurugram, and GIFT City.

• We stay negative on Nubank, even after the recent share correction; our rationale is tough competition, especially in Mexico, and worsening credit quality to remain a key risk in Brazil
• We believe that the fundamental outlook for Bradesco should improve further, supported by its strong insurance operations; conservatively, we estimate insurance could account for two thirds of group value
• Our neutral on Banco do Brasil is due largely to heightened political risk; holding company Itausa is the best indirect vehicle through which to gain equity exposure in Banco Itaú

• In today’s Morning Views publication we comment on developments of the following high yield issuers: China Jinmao, Nickel Industries, Vedanta Resources, Bharti Airtel
• In the US, JOLTS job openings increased slightly to 7.74 mn (7.60 mn e / 7.51 mn revised p) in January, with the job openings rate little changed m-o-m at 4.6%. Layoffs declined for a fourth straight month to the lowest level since June 2024.
• Overall, the JOLTS report showed that the labour market was steady in January, albeit demand for labour could soften in the months ahead.

• With a 75.6% estimated probability, the Assura takeover by KKR and Stonepeak is highly likely, given board support and minimal offer sweetening, signaling no further bid increases.
• Fair Valuation: The 49.4p per share offer represents a 32% premium to pre-bid trading levels, aligning with Assura’s NAV, and exceeding PHP’s rejected 43p per share merger proposal.
• KKR may extract cost savings from Assura’s 12% EPRA cost ratio, potentially saving £3+ million annually, alongside additional efficiencies from delisting and financial restructuring.

• In 1H FY07/25, the company reported sales of JPY22.6bn (-3.9% YoY) and business profit of JPY3.1bn (+124.0% YoY).
• The company resolved to support a Tender Offer by SMFL MIRAI Partners and plans to delist its stock.
• As of end-January 2025, floor space under management reached approximately 6.6mn sqm with high occupancy rates.

• When the Starwood/Warburg Pincus Consortium announced a firm offer on the 4th December, it was pre-conditional on a raft of regulatory approvals from no less than eight countries/jurisdictions. 
• We’re half way there, with four approvals now squared away, leaving Australia, China, Hong Kong and New Zealand still to give the go ahead. 
• Irrevocables comprising 34.26% of the register (and 57.01% of disinterested shares) are now in the bag. This is a done deal. It’s just a question of timing.

• Local instos borrow from brokers or peers, KSD collects and cleans the data, then KOFIA reports stock borrow balances daily with a two-day lag.
• Offshore borrows via EquiLend or PB deals don’t show up—KSD reporting only covers local institution-to-institution stock loans.
• Assume 60% of reported borrow balance is real shortable ammo—adjusting for this helps filter out noise in short positioning.

• The Indusind Bank (IIB IN) stock was down 27% yesterday following the announcement of Derivatives Portfolio losses that have wiped out 2.35% of equity.
• Foreign investors were big sellers in the last 3 months of 2024. That led to increased foreign room, leading to an index upweight in February and index inclusion in March.
• The drop in market cap and free float market cap will see Indusind Bank (IIB IN) deleted from the S&P BSE SENSEX Index in June and the NIFTY Index in September.

• Cambridge, a Singapore-based firm, purchases a Sydney office block for $70M from a former Tysan boss, expanding its real estate portfolio
• Hong Kong Land reports a significant increase in losses, totaling $1.4B, attributed to challenges within its Central Portfolio
• M&G Real Estate invests $62M in student housing in Melbourne, Australia, highlighting their focus on the Australian real estate market. Warburg Pincus forms a partnership with SK Group to develop Korean senior living facilities, tapping into the growing demand for elderly care in South Korea.

• IndusInd Bank recently disclosed a significant accounting discrepancy in its derivatives portfolio, estimated to impact its net worth by INR 1,580 crore (~2.35%). 
• The issue pertains to internal trades executed over the past 7–8 years, now identified through a detailed internal review initiated following regulatory changes.
• This development, when viewed alongside the abrupt CFO exit, regulatory pushback on CEO tenure, and existing operational challenges, raises concerns around internal controls, risk governance, and management credibility.

• Bank Of Baroda (BOB IN) is looking to raise about INR 85bn (US$980m) in its upcoming qualified institutional placement (QIP).
• In an announcement released on Feb 13, 2025, BOB mentioned its board’s approval to raise upto INR85bn via various modes including a QIP. Since then, the shares have corrected 1.2%.
• The deal would be a relatively large one to digest at 39 days of three month ADV. The company’s last fundraise did not do well.

• The convenience and affordability of Terra Vista housing, as well as proximity to LA, are expected to drive demand from TRCC employees and others.
• The development of the nearby Hard Rock Hotel & Casino Tejon is another likely driver of demand for affordable housing from its employees.
• Upon completion, Terra Vista at Tejon is expected to be the largest rental community in Kern County.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Yuexiu Property, Adani Energy Solutions
• In the US, treasuries climbed on safe-haven demand and increased expectations of Fed rate cuts, amid growing concerns over the US economy. The UST curve bull-steepened, with the yield on the 2Y UST declining 12 bps to 3.89%, while the yield on the 10Y UST fell 9 bps to 4.22%. Fed-dated OIS were pricing in 81 bps of rate cuts this year, with the first decrease expected in June.
• Equities sank on rising economic uncertainty, given rising trade tensions and after US President Donald Trump’s comments that the economy is facing a “period of transition” this year. The S&P 500 fell 2.7% to 5,615, while the Nasdaq slid 4.0% to 17,468.

• On 7 March, Insignia Financial (IFL AU) disclosed a revised non-binding privatisation offer from Bain and CC Capital at A$5.00, an 8.7% premium to their previous A$4.60 offer.
• The exclusive due diligence period ends on 17 April (six weeks from signing the exclusivity deed). The Board will recommend a binding offer of at least A$5.00. 
• The offer is attractive compared to historical trading ranges, peer multiples and precedent transactions. Therefore, a binding offer would gain shareholder support.

• The S&P/ASX 200 (AS51 INDEX) has suffered a continuous sell-off for the past 3 weeks. The index is deeply oversold, our model predicts an imminent reversal.
• The reversal could lift the index to the 8091-8208 price area, but the index may start to fall again after that.
• As posted by Brian Freitas there has been 7 changes for the S&P/ASX 200 (index rebalance), read his insight for further details on this.

• MSCI China has rallied 19% YTD, outperforming DM and EM by 18% and 14% respectively.  We think it makes sense to look at China and Hong Kong again
• Part of the rally is driven by AI optimism.  In terms of fund flow, we are seeing increasing south-bound fund flow to HK equity market at a fast pace
• We think Sun Hung Kai Properties, which is a proxy for Hong Kong, may benefit and play the catch up game on the back of very attractive valuation

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Longfor Group, Melco Resorts, Sands China, Tata Motors

• In the US, February nonfarm payrolls increased to 151 k (160 k e / 125 k revised p), albeit the figure came in slightly below estimates. Moreover, the January number was revised downwards to 125 k (143 k p), with the two-month revision at negative 2 k (+100 k p). The unemployment rate edged up to 4.1% (4.0% e / 4.0% p). The average hourly earnings rose 0.3% m-o-m (0.3% e / 0.4% revised p) and 4.0% y-o-y (4.1% e / 3.9% revised p).

• Fed Chairman Jerome Powell has reiterated that the US central bank is in no rush to reduce rates. He said: “Despite elevated levels of uncertainty, the US economy continues to be in a good place”, adding that “sentiment readings have not been a good predictor of consumption growth in recent years”.

• The recent results from MGIC Investment Corporation for the fourth quarter of 2024 highlight both strengths and potential challenges within the company.
• With a net income of $185 million for Q4 and a 14% annualized return on equity, MGIC showcases financial stability.
• In contrast, for the full year, net income stood at $763 million, a moderate increase from $730 million in the prior year.

• Lincoln Financial Group has reported its financial performance for the fourth quarter and full year of 2024, showcasing a blend of strategic progress and challenges that reflect its ongoing transformation.
• A key highlight of the results is the marked increase in adjusted operating income, which reached its highest level in three years amidst a backdrop of strategic repositioning and capital strengthening efforts.
• In 2024, the company successfully raised its RBC ratio to over 430% by year-end.

• Fidelity & Guaranty Life (F&G) has reported a robust performance for the fourth quarter and full year of 2024.
• The company achieved record gross sales of $15.3 billion, marking a 16% increase from the previous year, driven by strong demand across its individual annuity and life solutions segments.
• Retail channel sales reached a record $12 billion, a 20% gain, highlighting the significant traction in its Fixed Index Annuity (FIA), Multi-Year Guaranteed Annuity (MYGA), and Indexed Universal Life (IUL) products.

• In the fourth quarter of 2024, Aflac Incorporated reported strong earnings, with net earnings per diluted share rising by 23.8% to $9.63, and adjusted earnings per diluted share increasing by 15.7% to $7.21.
• This positive performance was largely driven by the company’s operations in Japan, which accounted for over 70% of pretax adjusted earnings.
• Aflac Japan enjoyed a stable premium persistency rate of 93.4% and reported a 15.5% growth in pretax adjusted earnings.

• Warburg Pincus and SK Group have joined forces to launch a new senior living venture in Korea.
• KKR, APG, Gaw, and Alyssa will be participating in discussions about residential trends on MTD TV Forum.
• Alyssa has extended its partnership with Dai-Ichi Life for the management of 669 Japanese apartments.

• During the period under consideration, i.e. January 27th, 2025 to February 26th, 2025, the EUR/USD pair posted both downward and upward swings.
• In the beginning, it faced a general decrease, until February 10th where the pair faced a sharp increase.
• After that, it fluctuated sideways in a slight but steady upward momentum, and by the end of the period the price traded at almost the same level as of January 27th. 

• We look at the performance of the index rebalance strategy over the year using weekly forecasts. In short, it has been a mixed bag for Asia.
• India and China have been among the worst performing markets in the region while Australia and Korea have been among the better performers.
• A lot of the outperformance appears to be front loaded, so getting the forecasts right early in the review period is of paramount importance.

• AH Premia continue to fall. Spread curve torsion reverses again with wide premia trades seeing Hs perform the best vs their As.
• To me, warning signs are flashing on spreads. They are at their narrowest in 5yrs and they are volatile. Last week I recommended a HUGE trimming (30%) of the book.
• Hindsight is 20:20. I should have kept them, but the book still produced 51bp of alpha for the week on top of the 35bp of H/A beta. 

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Naigai Trans Line (9384 JP), Soundwill Holdings (878 HK), Seven & I Holdings (3382 JP), OneConnect Financial Technology (OCFT US), Smart Share Global (EM US). 
• Lowest spreads: Shibaura Electronics (6957 JP), Domain Holdings Australia (DHG AU), PointsBet Holdings (PBH AU), Makino Milling Machine Co (6135 JP), Proto Corp (4298 JP). 

• British Land is an office and retail landlord in UK.  Around 60% of its assets are campus/offices, with all assets located in UK
• We think the underling retail and office market are showing solid recovery, which will support British Land key operating business
• British Land also sees capital recycling as an important pillar, including dividend, balance sheet management, and M&As to drive shareholders’ returns

• After small-cap property developer Soundwill Holdings (878 HK) was suspended pursuant to the Takeovers Code, I expected an Offer by way of Scheme. 
• And that is what unfolded. Grace Foo (ED) and her family, controlling 74.97% of shares out, are Offering $8.50/share, including a $1.00/share dividend, a 62.84% premium to undisturbed.  
• That’s still a whopping 87.66% discount to the most recent NAV (30th June 2024). But what are the options for minorities (apart from the headcount test)? And terms are final. 

• US steel and aluminum tariffs (effective 12 March US time) will take effect on March 13 across the Asia-Pacific region. Volatility can be expected in Japan, South Korea, India, China.
• Major quarterly derivatives expirations will occur on March 13 in Japan (Nikkei 225, TOPIX, Stocks), South Korea (KOSPI 200, KOSDAQ 150, Stocks), and India (BSE Stock Futures and Options).
• Earnings announcements for AIA Group (1299 HK) and Li Auto (2015 HK/LI US) are scheduled for March 14, while India’s markets will be closed that day for the Holi holiday.

• Nikkei breaks lower, USD/JPY and trade tensions weighing on the market.
• Implied volatility rose as the market declined. We discuss implications of current spot levels that is dominated by Put open interest.
• Historic volatility continues to lag implied vol, we provide visuals on the extent of the lag.

• Kazakhstan is a landlocked country right between Russia and China. It’s wealthier than most realize, with a great amount of natural resources such as oil & gas and uranium.
• Thanks to resource extractions and favorable demographics, GDP per capita has grown rapidly.
• One of the biggest beneficiaries of that growth has been Halyk Bank – the country’s leading commercial bank.

• Kospi takes a breather this week after last Friday’s sell-off to trade in a narrow range.
• Short-Term volatility eases in trade shortened week pulling implied vol down.
• We highlight the dynamic between implied and historic volatility and discuss whether long or short volatility strategies have been the most effective this year.

• The Offering of Japan Post Bank (7182 JP) is not taking place the way “the right pattern” would suggest, but last time was kind of special. This time is different.
• Last time was a “second IPO” and coincided with a US regional bank crisis. This time the offering is smaller outright, and much smaller as a portion of float. 
• Pricing is Monday. It hasn’t moved much vs JPH. It needs to move more to be attractive. And there is still a bit of overhang to come.

• Soundwill Holdings (878 HK) announced a privatisation offer from the Foo Family, the largest shareholder, at HK$8.50 (HK$7.50 cash + HK$1.00 special dividend), a 62.8% premium to the undisturbed price.
• Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. No disinterested shareholder holds a blocking stake.
• While the offer is light compared to peer multiples, it is attractive compared to historical trading ranges. A low AGM minority participation rate facilitates the vote.